Services Provided

Situation

The company’s strategic plan to increase U.S.-based manufacturing capacity increased overhead so much that cash flow could no longer support the burden. As sales increased, consumer pressure forced prices down. The company was in a significant over-advance position on its line of credit and operations were cash-flow negative. The company could not meet payroll and faced immediate liquidation.

Our Role

We immediately negotiated a forbearance agreement with the lender and secured emergency funds to cover payroll. Initially brought in as CRO and interim CFO, we cut costs, reduced SKUs, implemented new management tools and incentive packages, managed trade vendors and daily cash requirements. Once the initial crisis was averted, we recruited a new management team and moved to a role as advisor to the CEO. We then worked with management to develop a new strategic plan to move the company from a manufacturer to an importing, logistics and brand-management company. Finally, we took the lead in refinancing more than $20 million in credit facilities.

Result

Our quick response provided the time to restructure the company and allowed management to regain credibility with its creditors. The company turned cash-positive within 45 days and remained so throughout the assignment. Controls implemented during the first 45 days became the foundation for the current management team. An advisory board was formed and meets quarterly. By the end of the first year, the company had turned a multimillion-dollar loss into a million-dollar profit.